Credit Guarantee Scheme Quiz
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Questions and Answers

What is the maximum credit facility guarantee limit provided by the Trust for Public Sector Banks?

  • ₹500 lakh (correct)
  • ₹300 lakh
  • ₹200 lakh
  • ₹50 lakh

    • Which type of bank can provide credit facilities not exceeding ₹200 lakh?

  • Foreign Banks
  • Microfinance Institutions
  • Regional Rural Banks (correct)
  • Private Sector Banks

    • What is the primary requirement for an institution to apply for a guarantee on credit facilities?

  • A written proposal from the borrower
  • Collaterals must be provided
  • A prerequisite agreement with the Trust (correct)
  • An initial deposit must be made

    • Which of the following is true regarding the guarantee provided by the Trust?

    <p>The Trust can reject any proposal that meets scheme norms.</p> Signup and view all the answers

    How often can a borrower avail incremental credit facilities under the Credit Guarantee Scheme?

    <p>After reducing the outstanding exposure limit</p> Signup and view all the answers

    What is the maximum guarantee limit for Microfinance Institutions as per the Trust's regulations?

    <p>₹50 lakh</p> Signup and view all the answers

    Which type of banks is NOT included in the category that can extend credit facilities not exceeding ₹200 lakh?

    <p>Public Sector Banks</p> Signup and view all the answers

    What is a common requirement that does NOT apply to receiving credit facilities under this Scheme?

    <p>Collateral security requirement</p> Signup and view all the answers

    What is the maximum discount an MSE can receive when it falls into three specific categories: Social, Geographic, and MSE Status?

    <p>30%</p> Signup and view all the answers

    Which group of individuals is eligible for a 10% relaxation in the Annual Guarantee Fee?

    <p>MSEs promoted by Agniveers</p> Signup and view all the answers

    Which of the following districts does not qualify for a 10% discount?

    <p>Any state capital district</p> Signup and view all the answers

    What is the risk premium percentage for newly registered MLIs or those without sufficient transaction history?

    <p>70%</p> Signup and view all the answers

    What document is required from Persons with Disabilities (PwD) to apply for guarantee coverage?

    <p>Disability Certificate</p> Signup and view all the answers

    When will the maximum discount for MSEs situated in Identified Credit Deficient Districts (ICDD) start being effective?

    <p>December 15, 2023</p> Signup and view all the answers

    Which MSEs receive a discount based solely on their ZED Certification?

    <p>ZED Certified MSEs</p> Signup and view all the answers

    What is the minimum CRAR required for Regional Rural Banks (RRBs)?

    <p>9%</p> Signup and view all the answers

    What is the frequency of the review of Risk classification of MLIs?

    <p>Annual</p> Signup and view all the answers

    Which of the following is NOT a requirement for Small Finance Banks (SFBs)?

    <p>Continuous net profit over the last five years</p> Signup and view all the answers

    What is the maximum allowable Gross NPAs for Scheduled Urban Co-operative Banks (SUCBs)?

    <p>5%</p> Signup and view all the answers

    Which criterion must be met for State Financial Corporations (SFC) regarding CRAR?

    <p>Minimum 12%</p> Signup and view all the answers

    What is the minimum Demand & Time Liabilities (DTL) required for Scheduled Urban Co-operative Banks (SUCBs)?

    <p>₹750 crore</p> Signup and view all the answers

    Which of the following is a requirement for Non-Scheduled Urban Co-operative Banks (NSUCBs)?

    <p>No major regulatory and supervisory concerns</p> Signup and view all the answers

    What financial condition must Regional Rural Banks (RRBs) meet concerning their net profit?

    <p>Must have positive net profit for the last three years</p> Signup and view all the answers

    Which statement regarding the registration criteria for Small Finance Banks (SFBs) is correct?

    <p>They should have net profit for at least the last three financial years.</p> Signup and view all the answers

    What is the basis for calculating the Annual Guarantee Fee (AGF) for term loans?

    <p>Outstanding amount as on December 31</p> Signup and view all the answers

    In what time frame must the Annual Guarantee Fee be paid for the first disbursement of credit facilities?

    <p>Within 30 days of disbursement</p> Signup and view all the answers

    For working capital loans, how is the AGF calculated?

    <p>On the projected outstanding amount provided by MLI</p> Signup and view all the answers

    What is the impact of the Hybrid Security Model on the calculation of the guarantee fee?

    <p>Lower fees are charged after netting off collateral value</p> Signup and view all the answers

    When is the annual guarantee fee generated each year for subsequent years?

    <p>In the 2nd week of February</p> Signup and view all the answers

    What is the main purpose of the online module available from January 01 to January 15 each year?

    <p>To update the outstanding loan amounts for guaranteed accounts</p> Signup and view all the answers

    What component affects the calculation of AGF for different levels of fee rate and risk rate?

    <p>Different collateral values and outstanding amounts</p> Signup and view all the answers

    What is the stipulated time for paying the subsequent annual guarantee fee once the first fee has been paid?

    <p>On a pro-rata basis for the first and last year, full for intervening years</p> Signup and view all the answers

    Which of the following is a requirement for the registration of a Microfinance Institution (MFI)?

    <p>Debt Equity Ratio not more than 10:1</p> Signup and view all the answers

    What is the minimum required CRAR for an MFI as per the registration criteria?

    <p>15%</p> Signup and view all the answers

    In the scenario where an MLI falls under 'Standard Rate plus Risk Premium of 15%', what would be the applicable fee rate for a guarantee of ₹10 lakh?

    <p>0.43%</p> Signup and view all the answers

    What fee rate applies for a guarantee coverage of ₹10 lakh if the MLI has an existing credit facility of ₹20 lakh and falls under 'Standard Rate plus Risk Premium of 15%'?

    <p>0.63%</p> Signup and view all the answers

    For an MLI applying the 'Standard Rate with discount of 10%' on a guarantee of ₹10 lakh, what is the resulting fee rate?

    <p>0.33%</p> Signup and view all the answers

    What is the maximum allowable Portfolio at Risk for an MFI, exceeding 90 days?

    <p>5%</p> Signup and view all the answers

    What is the fee rate for Women Entrepreneurs under 'Standard Rate plus Risk Premium of 15%' for a guarantee coverage of ₹10 lakh?

    <p>0.38%</p> Signup and view all the answers

    Which of the following statements about the Debt Equity Ratio for an MFI is true?

    <p>The ratio should not be more than 10:1</p> Signup and view all the answers

    What is the extent of guarantee coverage for MSEs situated in Identified Credit Deficient Districts (ICDD) after December 15, 2023?

    <p>90%</p> Signup and view all the answers

    What is the maximum extent of guarantee coverage for Micro Enterprises when the credit facility is above ₹50 lakh?

    <p>75%</p> Signup and view all the answers

    Which category has a maximum guarantee coverage of 90% for credit facilities approved after April 1, 2023?

    <p>MSEs promoted by Agniveers</p> Signup and view all the answers

    What is the guarantee coverage for MSEs located in the North East Region for credit facilities up to ₹5 lakh?

    <p>75%</p> Signup and view all the answers

    Which of the following categories is eligible for an additional guarantee coverage of 5% starting December 15, 2023?

    <p>All the above categories</p> Signup and view all the answers

    For guarantees approved before December 15, 2023, what will be the maximum coverage for MSEs with credit facilities up to ₹50 lakh?

    <p>75%</p> Signup and view all the answers

    What is the maximum guarantee coverage for MSEs for credit facilities up to ₹500 lakh?

    <p>85%</p> Signup and view all the answers

    Which of the following groups is specifically mentioned as qualifying for enhanced guarantee coverage?

    <p>Persons with Disabilities</p> Signup and view all the answers

    Study Notes

    Credit Guarantee Fund Scheme for Micro and Small Enterprises

    • The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) developed a scheme to guarantee credit facilities for micro and small enterprises (MSEs) extended by lending institutions.
    • The scheme, known as the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS-I), started on August 1, 2000.
    • The scheme was modified over time to improve operations, boost credit flow to MSEs and meet the needs of both MSEs and lending institutions.
    • The current scheme document was updated on January 1, 2025.

    Definitions

    • Amount in Default: The principal and interest outstanding on a borrower's account, as of when the account became a Non-Performing Asset (NPA) or the date of claim application. A maximum amount is guaranteed.
    • Collateral Security: Additional security provided in addition to primary security by a borrower for a credit facility.
    • Credit Facility: Financial assistance to a borrower, including term loans and working capital.
    • Eligible Borrower: Existing or new micro and small enterprises (MSEs) given credit without collateral or third-party guarantees.
    • Lending Institution(s): Commercial banks, regional rural banks, scheduled urban co-operative banks, etc., as specified by the trust.
    • Material Date: Date the annual guarantee fee for an eligible borrower is paid.
    • Non-Performing Assets (NPA): Assets classified as such by the Reserve Bank of India.

    Scope and Extent of the Scheme

    • The Trust provides guarantee in relation to credit facilities extended by a lending institution to an eligible borrower, subject to certain provisions.
    • Eligible lending institutions must enter into an agreement to cover the credit facilities under the Scheme.
    • The Scheme covers credit facilities (fund-based and non-fund-based) extended to a single borrower for Micro and Small Enterprises sector. This amount cannot be above specific limits.

    Credit Facilities Not Eligible for Guarantee

    • Credit facilities where risks are additionally covered under schemes managed by Deposit Insurance and Credit Guarantee Corporation or the Reserve Bank of India.
    • Credit facilities with additional risk coverage from the government, general insurers or similar entities.
    • Credit facilities already covered by NCGTC Ltd.
    • Any credit facility inconsistent with applicable laws or instructions from the Central Government or the Reserve Bank of India.
    • Credit facilities granted to a borrower who already availed of other guarantees under the Scheme.

    Guarantees

    • Details of the extent of Guarantee coverage given as detailed in Annexures (pages 21 through 29)
    • Minimum amount, and amounts beyond specific thresholds.

    Claims

    • Procedures for invoking guarantees when a borrower's account becomes an NPA
    • Conditions for waiving off of legal action
    • Time frames for invoking guarantee

    Subrogation of Rights and Recoveries

    • Lending institution duties to recover outstanding amounts from borrowers affected by the guarantee and to report on recovery efforts
    • The Trust(CGTMSE)'s limitations on exercising subrogation rights

    Miscellaneous

    • Appropriation of amounts received from lending institutions according to priorities
    • Provisions on termination of Trust liability under certain circumstances

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    Related Documents

    Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS-I) PDF

    Description

    Test your knowledge about the Credit Guarantee Scheme for public sector banks. This quiz covers various aspects such as eligibility, limits, and requirements for applying for credit facilities. Challenge yourself to see how well you understand the mechanisms behind this financial support system.

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